MANUFACTURING INVESTMENT PAYS OFF IN BETTER BUSINESS PERFORMANCE

COLUMBUS, Ohio -- In many firms, manufacturing takes
a back seat to marketing and finance functions when it comes to
long-range planning and investment.

But that may be a mistake. A new study of 60 firms in five
industries found that the best performing companies tended to
be those that were pro-active in making manufacturing a company
priority.

The study found that successful firms invested in new manufacturing
technologies and also did one or both of the following: emphasized
programs that empower workers or actively involved manufacturing
executives in strategic planning for the firm.

For example, of the firms which put strong emphasis on investing
in new technology and involving manufacturing executives in decision
making, 76 percent were among the high performers in sales growth
and market share. Only 30 percent of firms that put low emphasis
on these strategies were high performers.

"Manufacturing often takes a subordinate role in firms

because more concentration is placed on what the company can
sell rather than what it can produce," said Peter Ward, co-author
of the study and assistant professor of management science at
Ohio State University's Max M. Fisher College of Business.

"But successful firms don't ignore manufacturing; they
are pro-active in making manufacturing decisions."

Ward conducted the study with G. Keong Leong, an associate
professor of management science, and Kenneth Boyer, a graduate
student, both at Ohio State. Their study was published in a recent
issue of the journal Decision Sciences.

The study involved manufacturing firms that had plants located
in Ohio with at least 150 employees. The firms' primary product
was in one of five industries: hand tools, fabricated metal products,
plating and polishing, current carrying wire devices, and industrial
controls.

The researchers surveyed each firm's general manager, plant
manager, marketing manager, and manufacturing engineering manager.
The managers were asked how much emphasis the firm placed on these
three strategies:

_ Involving manufacturing executives in the company's strategic
planning, including decisions about long-term investments, operating
philosophy, and strategies for growth.

_ Investment in new manufacturing technology such as robotics
and computer-aided manufacturing.

The researchers then matched those answers to figures on the
firms' market share and sales growth.

"We found that successful firms need to adopt at least
two of the three strategies, and preferably all three, to be successful,"
Ward said. "Investing in new technology was the one strategy
that nearly all successful firms used."

Ward said many business observers have recognized that manufacturing
is not given proper attention at many firms, and they often suggest
better communication between manufacturing and other units of
the firm.

While good communication is important, it is not enough to
make a company a top performer, Ward said. "It takes more
than just listening to what manufacturing executives say. There
has to be an investment in technology."

The results also emphasize the importance of investing in
employees. "Successful technological programs also require
significant investments in people," he said. "For example,
employees need to be trained to properly use new technology when
it is introduced in the workplace."